Auditors hope to buy large chunks of BearingPoint

BearingPoint, the global management and technology consulting company headquartered in McLean, Virginia, filed for Chapter 11 protection on February 18,2009. Just over a month later, on March 23, the company announced an update to the plan, which involves selling virtually all of its businesses.

Deloitte and BearingPoint have entered into an asset purchase agreement, in which Deloitte will purchase most of the company's largest business unit, BearingPoint Public Services, out of bankruptcy for $350 million and certain of the company's liabilities. The existing financial restructuring process rules apply, which means that BearingPoint must consider all "higher and better" offers from other would-be buyers, and they must get Court approval before the deal is finalized. As other parts of the company are considered for sale, those agreements may be subject to a similar approval process.

BearingPoint also has a potential deal with PricewaterhouseCoopers LLP for the $25 million purchase of its North American Commercial Services business, including its Financial Services segment. This involves a non-binding letter of intent. If this deal goes through it will bring some contracts and assets of BearingPoint into PwC's Advisory Practice. It will also meant that PwC will gain client service professionals with enormous business and consulting experience in industries like energy, utilities, insurance, pharmaceuticals, and life sciences.

In addition, PwC Advisory Co., Ltd (PwCJapan) is working on a deal to buy BearingPoint's consulting practice in Japan. If this sale goes through it will create the biggest advisory practice in the Japanese market, with a team of over 1,500 professionals.

Other potential deals include negotiations for the sale of BearingPoint's European and Latin American practices as well as in negotiations to sell various parts of its Asia Pacific practices other than Japan.

Stability at Last?

For some long-time BearingPoint staff and managers, the employment ride has been anything but smooth. Before it split off, BearingPoint was originally the consulting arm of KPMG. And a large block of the company's consultants were once employees of Arthur Andersen. Now more change and the uncertainty that comes with it has driven many to look for work elsewhere. If and when the Deloitte and PwC deals are complete, the workforce may finally have the sense of stability they've lacked.

When the dust settles, the results should be interesting. Looking down the road at the possibilities, some industry watchers have raised provocative questions about the future, including this one:

Will Deloitte and PwC be able to perform attest services to consulting clients?


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